It can start spawning on items at Item Level 6, but will not be able to spawn on all items until level 34. Some items also are not able to acquire full effect.
The steal comes from how much damage you do to the monster. So 5% Life Stolen will return 5% of the damage you do to a monster. Life steal only works on melee and physical ranged attacks.
2-5% Life Stolen Per Hit
|Magic Suffixes - Life|
+ Life — Jackal • Fox • Wolf • Tiger • Mammoth • Colossus • Squid • Whale
Life Stolen — Leech • Locust • Lamprey
Life Regeneration — Regeneration • Regrowth • Revivification
+ Life Per Level — Centaur • Elephant
+ Life — Spirit • Hope
Life Regeneration — Honor
+ Life — Life • Sustenance • Vita